Tire Wholesalers

The US tire wholesalers industry includes about 1,200 companies with combined annual revenue of about $20 billion. Major companies include American Tire Distributors and TBC Corporation. The industry is concentrated: the 50 largest companies generate about 70 percent of revenue.

COMPETITIVE LANDSCAPE

Demand depends on consumer income and driving volume. The profitability of individual companies is linked to merchandising and marketing. Large wholesalers have economies of scale in distribution, support of national accounts, and advertising and promotion. Small companies can compete by specializing in types of tires or applications (such as for farm equipment or motorcycles) or by offering superior service and support. The industry is capital-intensive: annual revenue per employee is close to $600,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Tire wholesalers sell new replacement automobile tires (50 percent of revenue); new replacement truck, bus, and industrial tires (40 percent); and used or retreaded tires (less than 10 percent). (Original tires for new cars are sold directly to car companies, called OEMs, by tire manufacturers.) Some wholesalers also sell wheels and associated parts. About 75 percent of consumer tire sales are "flag" brands (premium manufacturer brands); 10 percent are "associate" brands (economy manufacturer); and 15 percent are private-label.

Product is bought from US manufacturers such as Goodyear, Bridgestone, and Cooper Tire, and is also imported from foreign producers. Supply contracts with manufacturers are typically negotiated annually and include quantities and prices.

Wholesaler operations consist of warehouse operations and sales. Large ...